Good candidates reject offers and experienced employees leave for better pay when salaries fall behind the market. Unequal salaries can be just as damaging, especially when employees doing similar work discover that their pay differs without a clear reason.
Salary benchmarking helps employers spot these problems before they lead to rushed counteroffers or costly replacements.
What Is Salary Benchmarking?
Salary benchmarking helps answer a simple question: what are employers paying for work like this?
It involves comparing a role with similar positions in the market, then using the findings to assess whether your salary is competitive. A useful comparison looks beyond the job title to factors such as responsibilities, seniority, skills, industry, location, and organisation size.
It is not the same as:
- A salary survey, which provides pay data from a group of employers
- Job evaluation, which measures the relative value of roles inside an organisation
- Payroll analysis, which examines salaries, allowances, deductions, overtime, and other payroll costs
Salary surveys can provide the data, while job evaluation and payroll analysis add internal context. Benchmarking brings that information together to support pay decisions.
It should not be confused with minimum-wage compliance either. Minimum rates set a legal floor; they do not show what comparable employers offer. A lawful salary can still be uncompetitive.
How Can You Tell If You Are Paying Employees Competitively?
You need to look at two things: what your hiring and retention patterns suggest, and how your salaries compare with similar roles in the market. Neither provides the full answer on its own.
Look for Signs of a Pay Problem
Your salaries may need a closer look if:
- Candidates regularly reject offers because of pay.
- Employees leave for better-paying versions of similar roles.
- New hires earn more than experienced employees doing comparable work.
- Managers negotiate offers without approved salary ranges.
- Similar roles have pay differences that are difficult to explain.
- Responsibilities have grown, but salaries and job grades have not changed.
- Counteroffers have become a common way to retain employees.
These signs do not prove that pay is the problem. Employees may leave because of poor management, limited career growth, workload, or workplace culture. However, repeated hiring and retention problems give employers a reason to check whether their salaries are still competitive.
Compare Your Pay With Similar Roles
Job titles do not always describe the same work. An operations manager may oversee one branch and five employees in one company, but manage several locations, a large budget, and hundreds of employees in another.
For a useful comparison, look at:
- Actual responsibilities and decision-making authority
- Seniority, qualifications, and experience
- Team size and budget or revenue responsibility
- Industry, organisation size, and location
- Scarcity of the required skills
- Working arrangements and travel requirements
- Bonuses, commissions, allowances, and benefits
The relevant market may also extend beyond Kenya. Local employers recruiting software engineers, executives, or other scarce professionals may compete with regional businesses and international companies offering remote work.
How to Conduct a Salary-Benchmarking Review
Start by deciding what the review needs to cover. You may examine salaries across the organisation or focus on roles that are difficult to fill, have high turnover, or regularly raise pay concerns.
Step 1: Define the Purpose and Scope
First, decide what the review should help the business do. It might be used to set salaries for new hires, prepare the annual pay review, address unexplained pay gaps, or improve retention in hard-to-fill roles.
Then define the scope. Will the review cover the whole organisation, one department, or a small group of roles? Will it compare base salaries only, or will it include bonuses, allowances, and benefits?
These decisions keep the review focused and determine which roles and market data are relevant.
Step 2: Confirm What Each Job Involves
Benchmark the role as it exists today, not as it appears in an outdated job description.
For each position, confirm its main responsibilities, reporting line, decision-making authority, required skills, team size, and any budget or revenue responsibility. Speak to the manager and employee where the written description no longer reflects the work.
This creates an accurate role profile that can be matched with comparable positions in the market. Without it, the company may benchmark the title rather than the actual job.
Step 3: Use Recent Data From More Than One Source
Salary information may come from formal surveys, recruitment firms, professional associations, industry reports, government publications, and the company’s own hiring records.
The Robert Walters Africa Salary Survey, for example, covers salaries and hiring trends across several professional fields.
Each source has limits. Job adverts may leave out benefits, public salary websites may rely on self-reported figures, and candidate expectations do not necessarily reflect what employers pay.
Check when the data was collected, which employers it represents, and whether it covers the location and type of role being reviewed.
Step 4: Match the Work, Not the Title
Do not assume two jobs are comparable because they share a title, or rule out a useful match because their titles differ.
Focus on the work itself. The responsibilities, seniority, decision-making authority, and size of the operation should be similar enough for the comparison to mean something.
Step 5: Include the Rest of the Package
Base salary tells only part of the story. Medical cover, bonuses, commissions, transport allowances, flexible working arrangements, and additional leave can make one offer more valuable than another.
Include benefits that can be valued financially and record the others separately. This gives the employer a more complete view without pretending every benefit has an exact cash equivalent.
Step 6: Check for Internal Pay Gaps
Once the market comparison is complete, look inside the organisation.
Are employees doing similar work paid consistently? Performance, experience, qualifications, location, or greater responsibility may justify differences. Those without a clear reason deserve attention.
Also look for pay compression. This happens when rising market rates push new-hire salaries close to or above the pay of experienced employees whose salaries have not kept pace.
How to Interpret Salary Percentiles and Build Pay Bands
Market data rarely gives one correct salary for a role. Instead, it shows a range of what different employers pay. Percentiles help you understand where a particular salary sits within that range.
For example:
- P25, or the 25th percentile: About 25% of salaries in the dataset fall below this point.
- P50, or the median: Half fall below this point and half fall above it.
- P75, or the 75th percentile: About 75% fall below this point.
These figures describe the salaries in the dataset, not levels of employee seniority. P25 does not mean junior, just as P75 does not mean executive.
Employers can use the data to choose where they want to compete. A company may pay around the median for most roles but offer more for scarce skills or positions that are particularly important to the business. Benefits, career opportunities, and affordability may also influence that decision.
Building Pay Bands
A salary band sets the lowest and highest amount the company expects to pay for a role. Instead of negotiating every salary from scratch, managers have a range to work within.
Each band has three main points:
- The minimum is the bottom of the range.
- The midpoint is the company’s reference rate for the role.
- The maximum is the top of the range.
Salary benchmarking data can help set these figures. An employer might use the market median to guide the midpoint, then decide how far the range should extend above and below it.
Employees will sit at different points depending on factors such as their experience, capability, and performance. The company should have clear rules for where new hires enter the band and what allows an employee to move through it.
P25, P50, and P75 should not simply be copied across as the minimum, midpoint, and maximum. The percentiles show what the market pays; the band shows how the company has decided to manage its own salaries.
Make Better Pay Decisions
Salary benchmarking does not always lead to higher salaries. It may point to targeted increases, better benefits, updated job grades, clearer pay bands, or tighter approval rules. It may also confirm that no immediate change is needed.
What matters is knowing how your salaries compare, why differences exist, and what the business can afford. That gives employers a stronger basis for attracting and retaining talent without simply trying to outpay the market.
Bridge Talent Group helps businesses in Kenya and across East Africa understand the hiring market and recruit for difficult-to-fill roles. If compensation is affecting your hiring or retention efforts, contact our team to discuss your talent needs.
Frequently Asked Questions
How Often Should Employers Benchmark Salaries?
There is no fixed schedule, but reviewing salaries every one or two years is a reasonable starting point. Scarce, fast-changing, or difficult-to-fill roles may need more frequent checks.
Does Competitive Pay Mean Paying Above the Market Median?
No. An employer can compete below, at, or above the median depending on its benefits, budget, and talent needs. The median is a reference point, not a target every salary must reach.
Should Benefits Be Included in Salary Benchmarking?
Yes. Bonuses, commissions, allowances, medical cover, retirement benefits, and other material benefits can change the value of an offer. Compare total compensation where the available data allows it.
Where Can Employers Find Reliable Salary Data in Kenya?
Useful sources include recent salary surveys, recruitment firms, professional associations, industry reports, government publications, and the employer’s own hiring data. Check the date, sample size, location, and types of employers represented before using any figures.
Can an Employer Reduce a Salary That Is Above the Market Rate?
Not simply because benchmarking shows that it is above the market. The salary forms part of the employment contract, and Section 10(5) of Kenya’s Employment Act requires contractual changes to be made in consultation with the employee and recorded in writing. Seek legal advice before proposing a reduction.
